Mistake??

Today after work i was going to met a client with my colleagues and the this whole conversation taking me about 3 hours from 8pm-11pm. This client was 50 yrs old and he just start trading by few weeks ago only. This client was telling me that futures is a very challenging market, so when he bank in the money, he expect to lose all his money and what he wants is to learn how to beat this market. It is quiet surprise to hear from client that never aim for profits a first, however aim for the process of learning. However, due to not familiar with this market, this client was not doing very well in his trading. I noticed when this client is losing, he lose 6-8 lots however when wining, he only win for 2-4 lots only. Besides that, when he is losing, his lose more than 10 points and when winning, he only able to take 5-8 points profit only. From a normal mathematics calculation, his risk is more than the reward so even his system is prove 80% accuracy, he only end up with break even only.

As a result, I and my colleagues try to explain to him why he cannot beat the market for few points of view. Firstly, he don't have a proven work system to follow, so every of his trading is based on feeling only, and worst come to worst he won't admit when the trade is not in his way. Secondly, his risk is more than the reward, so the more he trade, the more risk he will expose to, porivide his feeling is almost 90% correct than he only able to beat the market. However, I pay my respect to this client, because he able to accept what mistake he has make and he also thanks us at the same time for reminding him. It is really hard to find such a senior client that willing listen to youngster like me plus willing to continue learn to beat the market. I wish for those client that losing too much in the market, please don't give up, find out what mistake are you making and do more study, trading is just a habit, and you will keep losing in the market because u keep making the same mistake. So find out what bad habit is that, and don't keep repeat it!!!!

"V" shape market part 2

FKLI was closing at 1065.5 yesterday, however it was open at 1070.5 with total 5 points of gap up. Surprisingly the market failed the break 1074 and all the way go down to 1063.5. Today is another tough day for those day traders wish to ride on the trend, but i would say that most of them fail to do so. When the market going down, I'm sure there is a lot of longist ( investors that having/doing long position) cut their position when the market slide down in such a short period. However, longist start to doubt on their action when the market start rebounding from the lowest 1063.5 to 1073. At the same time, when the market hitting 1066.5, I'm sure there is another new batch of shorty coming in (investors that having/doing short position) and they eventually become the additional victim for this "V" shape market when the market start climbing up to 1073, and end up most of the investors long at the high: short at the low. As a conclusion, in this type of markets, a person that don't even has a proper trading plan are easily get caught in this market. There are few points i wish to emphasize only, 1) proper trading plan is a must 2) always be patient and never go and chase the market 3) try to play on resistance and support level with stop loss 4) never short at the highest or long at the lowest cause we never know where is the top and bottom.

Yesterday I was posting trade idea of long at 1063-1064 level and unexpected it was today lowest level. Although able to long at the lowest, however, how to get out from the market is the another issue need to be consider. If let's say the long order was executed at 1064 level, i would suggest to move the stop loss level to break even points when the trade was gaining 6 points profit. When market was hitting 1070, adjusting the sell stop from 1060 to 1065 so that no matter how the market move, u still end up with break-even. But normally I will put at least 0.5 points stop profit which a sell stop of 1065.5 so that at least 0.5 point reward for today trade. Luckily the market was hitting lowest of 1066 only, so the stop profit is not trigger yet and a long position will be take profit at market close or hold overnight.

In theory, the stop loss was very useful, but sometimes it can be another obstacle for anyone try to catch the trend. Can u imagine what will happen if today stop profit was putting at 1066,not 1055.5 and eventually there will be 6-7 points to be missed up. To share with you all, there is 1 client of mine like to play on stop loss, and normally he put 10 points stop loss on every trade. Very surprisingly, every time the market was purposely hit his stop loss then only move to his direction. So after that few times of attempt, he start to don't believe in stop loss and decide not to use stop loss. Guess what happen next.......he was get caught in a trend and the trend wipe off a lot of his capital!!! Stop loss can be very useful in trend market but on the other hand, it also cause a lot of problem in a side ways market. As a result, it depends on how investors judge on its pros and cons plus the timing only. Whether u like it or not, stop loss is another strategy need to remember always because I can understand how a trend can wipe off a person's entire capital and normally it didn't provide any signal when it is here......

"V" shape market

What type of market is most confusing? Sideways? Uptrend? Downtrend? From my attention on my clients trade, most of them not doing well in "V" shape market. "V" shape market can happen when market up sharply 1st and then turn in another way sharply a while later or vice versa. I can found that in "V" shape market, most of the investors are easily buy at the high and eventually end up cut loss at lowest price when the market turn too fast until they cannot response it. So it is not surprising for investors to lose 2 times in a "V" shape market, so a very well defined trading plan is is necessary to avoid such a tragedy in your trading.

Today FKLI shows a very good example for "V" shape market. On friday, our FKLI was closing at 1076.5 and our market was gap up for 2 points and all the way up till 1082. I strongly believe at 1080-1082 range, there are nobody dare to go short, because at that time, the market was showing strength plus the regional holding quite well for that moment, so long is more preferable than short. As a result, when the market retrace to 1076-1078 level, investors are more willing to buy at this range price, because they think the market are strong and lower to buy is much more safer. Unfortunately, the FKLI start going down all the way once break 1076 and the day trader that doing long start questioning is it they long at too high and I'm sure most of the day trader that don't have any trading plan are cutting their position when market hit 1071 level.

When market is hitting the lowest 1070.5, it immediately bounce back all the way to 1080.5 . Can u imagine hows the investors that long at 1076 and cut loss at 1071, I'm sure only for those investors that didn't keep track on the market so closely can avoid cut loss at the lowest. In addition, it is even worst for those investors that cut loss at 1st then try to turn short at 1071. This is not a tragedy for long investors only, the same goes to short investors that wait patiently and didn't short at 1080 but some of them might try to short at 1071-1073 and try to imagine their feeling and reaction when the market is bounce back to 1080.5.

As u try to see from the point of view of investors, this can explain why "V" shape market is the most confusing and end up everyone long at high and short at the low. It is very hard to see an investors able to catch every up and down for today, provided this investors only setting 8-9 points profit taking, other than that, for those able to did it, I would said that their market sense very strong, I give my salute to them. To avoid such a disaster happen, i would like to suggest investors to use pivot points to identify the potential resistance and support so that their trading can run according to plan, worst come to worst the capital are protected with reasonable stop loss.

The potential support for today market was at 1070 while resistance at 1079.5. This indicates t investor can always play at the support and resistance level with 3-5 points cut loss. For example, when the market is drop from 1082 to 1073 that time, investors can try to long at 1070-1071 while stop loss put at 1068-1067 or maybe short stop at 1068-1067 and once the short stop hit, put buy stop at 1071. Always try to play around the support and resistance with cut loss, it sometimes can save the trouble stucking in "V" shape market.

For tomorrow trade idea, my resistance level was at 1079.5 while support at 1062.5. If let's say the market go down some more, i will not go for long if the market maintain at 1055-1060 level, i will long when the market move above my support points, try to long at 1063-1064 then put at sell stop at 1059-1060. Remember never long at the lowest, because we will never know where is the lowest, let the market prove where is the low then we only go long. Hopefully I'm correct tomorrow.

Buy low Sell high

One of the attractive feature in futures is that you are allow to sell now and then buy later. This will only work with profit if you able the identify the market going down soon, so you will choose to sell now, after that buy back in much more lower price to earn the difference. It seem like very easy, sell at high then only buy at low, however, who can predict what going to happen next day? Unfortunately most of the retailers are doing at the opposite way, so once they sell, the market seem like going up for no reason.

Lots of clients asking me this question "How come every time i sell then the market going up, and when i buy then the market start going down?" I think lot of futures traders looking answer for this question, and i hope my answer help them to solve the mystery. How to define as low and how to define as high? When the market is droping, i would not say that it is the low now. Nevertheless, i will say the market is at the low when the market is start rebounding for 5-10 points then i only will say that is the low. The same goes to define the high, which I only will say it is the high when the market is start retracing for 5-10 points from the high. Put in other words, when the market is droping, i would not aim to short, because when u choose to short, u might short at the low since there is lot of people short at the high price and start waiting the lower point to take profit.

When you start practicing your patience on never short when the market is droping or never long when market is going up, this eventually will reduce the chances of stucking in situation such as buy high sell low. Remember that, we can't never predict the highest and lowest, so always buy when the market is rebounding and short when market is retracing. Try to ignore picking the top and bottom, cause I always feel that long or short at safer level is the only way to ensure you never fall in the trap of buy high sell low.

Predictor vs Responder

1 of the hardest being a futures broker is when client A call in place a long order, meanwhile client B call in afterward place a short order. In world of futures market, there is no win win situation, only those smart people able to win the money, so in this case either 1 of my client will win. When giving advise to both of client A and B, what can I do is just emphasize on cut loss for the loser while advise remember to set a stop profit for the winners. I wonder how will other broker feel when they encounter this kind of situation? I would say that it is a conflict that easily happen for a broker and I find that it quiet hard to me when facing it.

I found that most of the clients like to predict the market rather follow the market. In other words, when they expecting the market is going to collapse, they will don't care whatever price, just insist to short the market only. For this kind of clients, they carrying a mind which the market must follow exactly what they think, cause they think they are always right. As a result, when the market start going up, they just keep hold on their position or even further short, however, this make they fed up with the futures trading. The message that I would like to pass to this kind of clients is that the only way of winning in futures is not necessary to be good predictor but be a fast responder is a must to survive in the market. Bear in mind, nobody can predict what will happen in the next day, so prediction is not the key to win, respond only can make u keep staying alive in the market. No matter long or short also doesn't matter, the most important is what will you do when you at the wrong side. Cut? Hold on? Average? For novice trader, 2nd and 3rd option always is their favorite choices, however cut is also 1 of the hardest part in futures trading and again only the top traders able to do it without mercy only. Lastly, always be a responder!! Always respond to the market, when something goes wrong, just cut!!! Cut really is not that easy, but I would say that it is the most important part to follow....

How to win money in futures market??

During the time i plan to write a blog regarding the view on fkli and fcpo, there are already lots of blog you can simply found at google.com, and most of them are concentrating sharing when to buy and when to sell on these 2 products. When thinking of too many people doing the same content delivery, so i plan to write something differently from them, mainly on sharing the experience and my thoughts as a futures broker.


The life is future broker always start from a new client that open an account, after that start pumping money to trade then either win or lose. Most of the clients are carrying very optimistic judgment on futures trading, because all of them wishing to earn fast money in futures so that the burden of their life can be lighten. Some clients even tell me, "futures is really easy to make money, if 1 day I make rm50, 1 month I get extra rm1000 already from trading already, it is definately better than increment during year end. Can u imagine if I play 2 lots, rm 2000 already, 3 lots rm 3000......!!!!" Too bad reality seem to move in different direction to what they expected, hence most of futures clients are not doing very well in their trading, and in the end they end up withdrawing money and tell me "futures is cheating money only!!!".

Do futures really cheating money? If most of the retailers losing money, then who are the winners? To answer this question, I would say that futures is a game that how to transfer the money from the losers to the winners. In order to beat this market, we need to do a lot of homework and always make ourselves stand at the smart side. Through out my blog, I will keep sharing something that I think is important to futures traders, at least it can prevent them to become big losers but whether can become big winners or not, then need to depend on themselves.